DAMMAM, Saudi Arabia (Zawya Dow Jones)--German engineering conglomerate Siemens AG (SIE.XE) is building a 600 million Saudi riyals ($160 million) gas-turbine plant in the industrial city of Dammam to cater to the kingdom's growing market.

The factory, due for completion in late 2013, will have the capacity to produce up to 20 turbines a year in the initial phase, as much as Saudi Arabia would need each year under its current electricity expansion targets, Arja Talakar, chief executive of Siemens Saudi Arabia, told Zawya Dow Jones on Tuesday.

Siemens Energy along with its local partner E.A. Juffali and Brothers is building the facility to manufacture gas turbines and compressors to be supplied to the local Saudi market, where energy requirements are strongly increasing, the company said.

Oil-rich Saudi Arabia is exploring various options to substantially increase its energy production capacities to meet soaring demand at home. Some analysts and Saudi officials estimate domestic demand is growing at 8% a year.

The kingdom's deputy Electricity Minister Saleh al Awaji said Tuesday the country must add 3,000 to 4,000 megawatts of installed electricity capacity each year in the near future to keep up with the domestic demand. Current installed capacity is about 52,000 megawatts, Al Awaji added.